What the SEC rescinding its shareholder proposal rule could mean for investors

David Fredrickson’s insights were included in a Pensions & Investments article about the Securities and Exchange Commission’s (SEC) new proposal that would rescind its shareholder proposal rules , Rule 14a-8, and its impact for investors.

According to David, if the SEC were to officially rescind Rule 14a-8, shareholders looking to have a proposal voted on at a company’s annual meeting would have to adhere to that company’s advance notice bylaws stipulating when such a proposal could be offered.

From there, the proponent could either take an “old school ‘Mr. Smith Goes to Washington’ approach, (and) state their case” at the annual meeting, David said, or fund their own proxy solicitation by printing and mailing a proxy card to all shareholders before the meeting.

“Some proponents that have finances will be able to fund their own proxy solicitation and will,” David added. “But obviously, that’s a cost, and so it will likely discourage some from doing that.”

With the comment period ending November 20th, it’s unlikely a rule rescinding Rule 14a-8 will be finalized and take effect for the 2027 proxy season, David said. He’s eyeing the 2028 season as the first without Rule 14a-8 on the books. But first, stakeholders on both sides of the debate will have a chance to weigh in.